Like weather, economy changes either for better or for worse. Universities and colleges around the world are teaching the students about how the economy works. Among these students, some will be future politicians and they will contribute towards their respective country’s economic growth.
Economy works in many ways. Economists tried to explain the economic growth from the start of human history until now in books; they tried to simplify one of the most complex parts of human civilization. But how does economy work still remains one of the most complex subjects for people who never studied economy in their lives? Every citizen contributes towards country’s economy, but they are unaware of it. The rich citizens contribute a lot towards the economy by paying more taxes or creating more demands for productivity but poor people also contribute, and their contribution is no small matter either.
Economy according to many intellectual minds is actually a machine and many common factors are parts of that machine. These small parts decide how good the machine will work.
One of the most important parts of the economy machine is transaction. Money does not stay in one place; money travels places by transactions. Buying goods, selling goods, borrowing money, transactions are happening every day, and every minute. In the stock market, someone is selling the stock and at the same moment, one person is buying the same stock. Transactions between buyers and sellers are moving the country’s economy.
When someone spends another person earns that money. This is very basic for economic growth. Countries like the US have the richest individuals and these rich people are spending a huge amount of money every day. They are spending and multiple people are getting their money. Money is transferred from one hand to another; the economy is growing. These riches are also creating demands for products and multiple jobs are created to supply the products they want. Opportunity for new jobs mean earning an opportunity for more common citizens, ultimately further growth of economy, this is a cycle based on supply and demand.
Economic revolution depends on Geographical location, educational qualifications of the citizens. Economy of California is exemplary thanks to Hollywood and Silicon Valley. There are millionaires and billionaires, thousands of jobs in different sectors, world famous universities. Economy of California is reaching sky high with every passing year.
There are different types of economy. The most common economy is the market-based economy. Products and produced and sold according to the demands of locals. This economy is limited to only a small geographical area.
Command based economy is set by politicians of the country. They decide the price of every item, even the locally produced fruits and vegetables. Many countries release yearly budget to let citizens know about the prices of produced goods.
A new age economy that is finding popularity is the green economy, but this economy is mostly meant for an already highly developed economy. This economy is based upon private donations and funds. The purpose of this economy is to decrease the pollution level and make the atmosphere healthier. The purpose of this economy is to save energy for the future.
With the growing popularity of the internet, there is now a new type of economy and this innovative economy is called the gig economy. Jobs in various sectors are created via online platforms. This online job opportunity is contributing a lot towards the global economy. New generations of freelancers are working with top professionals around the world sitting right at their home. They are sitting in an Asian country and getting paid from an Australian company for the service they are providing. This is amazing. The Internet is creating workers without borders and helping economy grow globally.
Economy is one of the most interesting filed to study. There is no shortage of excitement when it comes to economy. The concept of economy will exist till the human civilization last. Economy started even before people started using the money. Economy will be there even when people stop using money completely and use only credit cards to pay.
Economy is good until there is a balance between earning and spending. Not only individual person go broke if the spending is way more than earning, a country’s entire economic system fails due to over spending. Debt is the worst enemy for an economy. The spending should always be much less than the total earning.
Since multiple little factors decide the state of the economy these days, new research subjects are added to the field of economy. Sociology, applied science, finance are now taught as part of an economy lesson.
Saving, labor, productivity, demand and supply decide the status of economy. Common citizens to millionaires investors everyone play contribute in the country’s economy. More business, more transactions mean more money. More money means more developed economy.
Economy starts to suffer once the demand stars to decrease. But then some new ideas are developed and the economy gets much-needed boost. This is the economy is working from ancient times.
Would you like to read more about this topic? This book might interest you: How Does Economy Work.